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Kenya seeks more private investment in public infrastructure

15 April 2016, 17:37

Nairobi - Kenya’s government is seeking more private investment in state infrastructure to maintain the pace of spending on new railways and other vital assets while reducing the budget deficit.

The East Africa’s biggest economy aims to cut the deficit to 6.9 percent of gross domestic product in the fiscal year starting in July from a forecast 8.1 percent for 2015/16, Reuters reports.

Finance Minister Henry Rotich said the government had initiated several Public Private Partnership (PPP) projects to build roads, energy plants and housing.

The whole intention is to get most of the projects that private investors can take up so that we can reduce pressure on our domestic resources.

“The whole intention is to get most of the projects that private investors can take up so that we can reduce pressure on our domestic resources,”

PPPs have been touted as a valuable route to fund new roads, airports, seaports, railways and power plants across Africa, a continent that struggles with creaking infrastructure.

But analysts say such financing has often stumbled over government guarantees and revenue sharing arrangements.

Transport Principal Secretary Irungu Nyakera said Kenya and others had to make such plans work to sustain investment.

The Transport ministry has one of the highest budgetary allocation this fiscal year, at Sh280 billion ($2.77 billion), after decades of under-investment.

But Nyakera said it is nothing close to what is needed even though past investment has shown the potential for transport to spur economic growth.

“The investment in infrastructure had a significant multiplier effect on the economy and the realisation that with every large infrastructure then it actually leads to a lot more economic activity a long that corridor, so if you think of the Thika road that was done if you think of know the other major highways and even on the rail networks,” he said.

The ministry is working on projects that include expanding Kenya’s main port in Mombasa and the Nairobi international airport, as well as new road projects around the country.

Kenya, which acts as a trade gateway for land-locked neighbours, is also building a new standard gauge railway, replacing the slower narrow gauge line, between Mombasa and Nairobi at a cost of Sh327 billion.

Investors from South Africa, the United States and Asia had expressed interest in parts of a $12.4 billion (Sh1.3 trillion) transport corridor linked to a planned port on the north coast.

The project, conceived in the 1970s, aims to improve transport links for land-locked.

- Reuters

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